January Investing Difficulties
January into February has proven to be a very difficult time for the EAF portfolio. Lets start with the bad parts and then move into some slight silver linings.
Taking Losses
The last 20 days have seen extreme losses in the EAF portfolio. Most of these losses come directly from credit spreads. Of the spreads sold to cover until February 20th a staggering 5 of them have hit their stop loss numbers resulting in a 17.6% loss on the year. That is just huge and further follows my thoughts on spreads and their dangers. I've had good months. This is my first really bad one. I intend to wait until the 20th to re-evaluate where I sit on them and slow down my selling.
To add a small amount of insult to injury, our Dividend Champions portfolio of buy and hold stocks is being weighed down by some stocks that I had purchased very early in my investing career that don't really belong. Currently I am sitting on a 0.87% loss for those but this is the way of the market and I expect things to turn around.
Silver Linings
Losses out of the way lets move on to some more promising prospects. The 401k funds are up a healthy 2%. That is a great start to the year and I'm looking forward to more from that. The really interesting portions however are the two new investing ideas I've gone with: Lending Club and Betterment.
I've received my first loan payments from Lending Club to the tune of 0.17% interest. Remember that Lending Club needs time to get their loans out to people and process payments so by the end of the month this number should increase. With that in mind its important to remember that Lending Club is a long play in terms of investments. Unless you drop a large sum of money in from the start then you will have to build up brick by brick which is what I'm doing. Just receiving my first payments has a good feeling attached to it and I'm looking forward to even more. We shall see what the year holds.
Betterment has actually turned over some fantastic numbers considering the length of time I've been in it and ease of use. Currently the EAF portion is netting 1.31%. I must say that I am rooting for Betterment. I've looked for a long time for an investing strategy with minimal time requirements and low overhead costs that allows for smaller incremental investing so that my friends and family can invest with confidence. I'm hoping this is that vehicle. So far so good.
Overall: A not so great 30 days
So here is the real tale, how is the portfolio looking? Well frankly my own individual investments are down 4.51% total. Mostly due to underperformance of older stocks and credit spreads that went the wrong way on me (despite the indicators that everything was solid). However, and this is why I said in an earlier post that everyone should have a 401k, that retirement vehicle swoops in to cover losses and bring the portfolio into the black by 0.8%. It won't knock your socks off but it will keep us in the black and running until the 20th when we will look at some new credit spreads.
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